If Bitcoin was the word of the year for 2017, then blockchain is certainly on track to take the prize in 2018. One thing that both the cannabis industry and the blockchain industry have in common is that they are both changing rapidly while becoming more mainstream.

1. How Blockchain Technology Could
Transform The Weed Industry
B Y J E S S I C A V E R S T E E G O N 0 1 / 2 4 / 1 8 A T 1 2 : 3 1 P M
If Bitcoin was the word of the year for 2017, then blockchain is certainly on
track to take the prize in 2018. One thing that both the cannabis industry and
the blockchain industry have in common is that they are both changing rapidly
while becoming more mainstream.
It’s important to understand how blockchain works to grasp why the
technology is being utilized within various industries and why it makes a great
fit for the cannabis industry.
Blockchain is the underlying technology powering Bitcoin — that’s how it all
started. In fact, blockchain is nothing more than a digital ledger of transactions
stored in "blocks." Miners use high-end computational chips to process
transactions and add them to new blocks, though some chains don’t use
miners. Nodes verify all transactions and ensure that all blockchain rules are
met. For example, if somebody tries to send the same funds twice, the
transaction will be voided and ignored.
So, at its core, blockchain represents a digital database and ledger of
information which is decentralized and transparent. The Ethereum blockchain
takes things a step further, allowing developers to create smart contracts on
the platform. These smart contracts can be used to store data or self-execute
if preset conditions are met. The possible applications for smart contracts are
extensive, from notarization and healthcare to real estate purchases. The
common elements of such smart contracts are that costs can be reduced, can
function autonomously, are trustless and can execute 100 percent as
programmed to.
Why the Cannabis Industry Needs a Blockchain-Based Solution
Cannabis is still struggling to find its legitimate place within society in many
countries and regions, and the U.S. is no exception. While the substance may
be legal for consumption in many states, the federal government still classifies
cannabis as an illegal substance.

2. As a result of current legislation, the industry faces numerous problems on a
day-to-day basis. It’s difficult for companies and contractors within the industry
to rent a desk or office, as many landlords are reluctant to take on tenant
working within an industry that is still federally illegal. Moreover, opening a
bank account for your business is impossible if you work with cannabis,
creating more problems as a result. If one cannot bank, they must function on
a cash basis, which many dispensaries and growers do. Having to do so
creates a magnitude of bookkeeping, documentation and auditing issues.
And to top this all off, there are very limited guidelines provided by the
government for the cultivation and sale of cannabis. This makes it extremely
difficult for companies within the industry to find vendors and partners they
can trust. If you are buying a batch of cannabis from a harvest, you may end
up paying for one thing and getting something entirely different. The
consequences that arise from this can be harmful — a CBD patient could
potentially end up taking THC, for example. Though more commonly, there is
a general lack of trust in the industry as well as questionable data surrounding
quality and compliance.
Interlinking the Supply Chain With Blockchain
A company selling any product should be able to track their purchase all the
back to its first point of origin. There are practices in place for this, such as
GMP (Good Manufacturing Practice) for the pharmaceutical industry.
However, the cannabis industry still has a way to go. The fact that this
industry is new to regulation and acceptance is also a blessing, in the sense
that it should be easier to adopt new best practices and technology.
Blockchain-based data solutions work much the same as a traditional
database in the sense that you can store all data, strings and variables. The
differentiating factor is that anything stored there is trustless and immutable.
Once a smart contract is released to the blockchain, the information it holds
cannot ever be altered at a later stage.
Blockchain also furthers the opportunity of quality control, as people are able
to know what they are really buying. Laboratories can act as a controlling
factor within the chain, and dispensaries can send samples of their purchased
product to a lab. The lab will test the product and compare the results to the
farmer’s input on raw materials, seeds, PH levels and other parameters. If it is
the case that the farmer input false data or lied about mold on the harvest, the
lab outcome would be linked to the smart contract of the entire batch.

3. Ultimately, blockchain provides the industry with the tech and the means of
reaching a higher standard of transparency, validity, trust and innovation.
Even the government should have nothing with which to find fault, as it would
have full access to such a system and black-market sales would be blocked.
The cannabis industry is a prime candidate to pioneer this revolutionized
supply chain tracking method — and I’m confident that plenty of industries will
follow suit.
Jessica VerSteeg is the CEO of blockchain platform PARAGON.
One thing that both the cannabis industry and the blockchain industry have in common is
that they are both changing rapidly while becoming more mainstream